
3.	ACQUISITIONS

In connection with the Acquisitions, we entered into various agreements with Valero related to the acquisition agreements, including an amended and restated omnibus agreement, an amended and restated services and secondment agreement, lease agreements, and additional schedules to our commercial agreements. See Note 4 for a summary of the terms of these agreements.

Texas Crude Systems Business

On July 1, 2014, we acquired the Texas Crude Systems Business from Valero for total cash consideration of $154.0 million. The Texas Crude Systems Business is engaged in the business of transporting, terminaling, and storing crude oil and refined petroleum products through various pipeline and terminal systems that compose the McKee Crude System (supporting Valero’s McKee Refinery), the Three Rivers Crude System (supporting Valero’s Three Rivers Refinery), and the Wynnewood Products System (supporting Valero’s Ardmore Refinery).

Houston and St. Charles Terminals Services Business

Effective March 1, 2015, we acquired two subsidiaries from Valero that own and operate crude oil, intermediates, and refined petroleum products terminals supporting Valero’s Houston Refinery (in Houston, Texas) and St. Charles Refinery (in Norco, Louisiana) for total consideration of $671.2 million, which consisted of (i) a cash distribution of $571.2 million and (ii) the issuance of 1,908,100 common units and 38,941 general partner units having an aggregate value of $100.0 million. We funded the cash distribution to Valero with $211.2 million of our cash on hand, $200.0 million of borrowings under our revolving credit facility, and $160.0 million of proceeds from a subordinated credit agreement with Valero. See Note 7 for further discussion of the borrowings under our revolving credit facility and subordinated credit agreement.

Corpus Christi Terminal Services Business

Effective October 1, 2015, we acquired Valero’s Corpus Christi East Terminal and Corpus Christi West Terminal (collectively, the Corpus Christi Terminal Services Business) for total consideration of $465.0 million, which consisted of (i) a cash distribution of $395.0 million and (ii) the issuance of 1,570,513 common units and 32,051 general partner units having an aggregate value of $70.0 million. We funded the cash distribution to Valero with $395.0 million of proceeds from a subordinated credit agreement with Valero. The Corpus Christi Terminal Services Business is engaged in the business of terminaling crude oil, intermediates, and refined petroleum products at terminals in Corpus Christi, Texas and supports Valero’s Corpus Christi East and West Refineries. See Note 7 for further discussion of the borrowings under our subordinated credit agreement.

McKee Terminal Services Business

Effective April 1, 2016, we acquired a subsidiary from Valero that owns and operates a crude oil, intermediates, and refined petroleum products terminal (the McKee Terminal) that supports Valero’s McKee Refinery (in Sunray, Texas) for total consideration of $240.0 million, which consisted of (i) a cash distribution of $204.0 million and (ii) the issuance of 728,775 common units and 14,873 general partner units having an aggregate value of $36.0 million. We funded the cash distribution to Valero with $65.0 million of our cash on hand and $139.0 million of borrowings under our revolving credit facility. See Note 7 for further discussion of the borrowings under our revolving credit facility.

Meraux and Three Rivers Terminal Services Business

Effective September 1, 2016, we acquired Valero’s Meraux Terminal and Three Rivers Terminal (collectively, the Meraux and Three Rivers Terminal Services Business) for total consideration of $325.0 million which consisted of (i) a cash distribution of $276.0 million and (ii) the issuance of 1,149,905 common units and 23,467 general partner units having an aggregate value of $49.0 million. We funded the cash distribution to Valero with $66.0 million of our cash on hand and $210.0 million of borrowings under our revolving credit facility. See Note 7 for further discussion of the borrowings under our revolving credit facility.

Reconciliation of Previously Reported to Currently Reported Supplemental Financial Information

The following tables present our previously reported balance sheets as of December 31, 2015 and 2014 (as presented in Exhibit 99.3 to our Current Report on Form 8-K filed with the SEC on August 4, 2016) retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business (in thousands).



	December 31, 2015
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
ASSETS
Current assets:
Cash and cash equivalents	$	80,783		$	—		$	80,783
Receivables from related party	18,088			—			18,088
Prepaid expenses and other	632			—			632
Total current assets	99,503			—			99,503
Property and equipment, at cost	1,110,399			66,444			1,176,843
Accumulated depreciation	(310,558		)	(15,004		)	(325,562		)
Property and equipment, net	799,841			51,440			851,281
Deferred charges and other assets, net	3,322			—			3,322
Total assets	$	902,666		$	51,440		$	954,106
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current portion of debt and capital lease obligations	$	913		$	—		$	913
Accounts payable	9,264			—			9,264
Accrued liabilities	1,690			—			1,690
Taxes other than income taxes	1,276			—			1,276
Deferred revenue from related party	129			—			129
Total current liabilities	13,272			—			13,272
Debt and capital lease obligations, net of current portion	175,246			—			175,246
Notes payable to related party	370,000			—			370,000
Deferred income taxes	320			—			320
Other long-term liabilities	1,116			—			1,116
Partners’ capital:
Common unitholders – public	581,489			—			581,489
Common unitholder – Valero	28,430			—			28,430
Subordinated unitholder – Valero	(313,961		)	—			(313,961		)
General partner – Valero	(5,805		)	—			(5,805		)
Net investment	52,559			51,440			103,999
Total partners’ capital	342,712			51,440			394,152
Total liabilities and partners’ capital	$	902,666		$	51,440		$	954,106



	December 31, 2014
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
ASSETS
Current assets:
Cash and cash equivalents	$	236,579		$	—		$	236,579
Receivables from related party	8,499			—			8,499
Prepaid expenses and other	727			—			727
Total current assets	245,805			—			245,805
Property and equipment, at cost	1,059,032			60,275			1,119,307
Accumulated depreciation	(273,398		)	(12,651		)	(286,049		)
Property and equipment, net	785,634			47,624			833,258
Deferred charges and other assets, net	1,385			—			1,385
Total assets	$	1,032,824		$	47,624		$	1,080,448
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Current portion of debt and capital lease obligations	$	1,200		$	—		$	1,200
Accounts payable	4,297			—			4,297
Accrued liabilities	1,054			—			1,054
Taxes other than income taxes	765			—			765
Deferred revenue from related party	124			—			124
Total current liabilities	7,440			—			7,440
Debt and capital lease obligations, net of current portion	1,519			—			1,519
Deferred income taxes	830			—			830
Other long-term liabilities	1,065			—			1,065
Partners’ capital:
Common unitholders – public	374,954			—			374,954
Common unitholder – Valero	58,844			—			58,844
Subordinated unitholder – Valero	146,804			—			146,804
General partner – Valero	4,617			—			4,617
Net investment	436,751			47,624			484,375
Total partners’ capital	1,021,970			47,624			1,069,594
Total liabilities and partners’ capital	$	1,032,824		$	47,624		$	1,080,448

The following tables present our previously reported statements of income for the years ended December 31, 2015, 2014, and 2013 (as presented in Exhibit 99.3 to our Current Report on Form 8-K filed with the SEC on August 4, 2016) retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business (in thousands).



	Year Ended December 31, 2015
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	243,624		$	—		$	243,624
Costs and expenses:
Operating expenses	92,025			13,948			105,973
General and administrative expenses	14,013			507			14,520
Depreciation expense	42,724			2,954			45,678
Total costs and expenses	148,762			17,409			166,171
Operating income (loss)	94,862			(17,409		)	77,453
Other income, net	223			—			223
Interest and debt expense, net of capitalized interest	(6,113		)	—			(6,113		)
Income (loss) before income taxes	88,972			(17,409		)	71,563
Income tax expense	251			—			251
Net income (loss)	88,721			(17,409		)	71,312
Less: Net loss attributable to Predecessor	(43,157		)	(17,409		)	(60,566		)
Net income attributable to partners	$	131,878		$	—		$	131,878



	Year Ended December 31, 2014
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	129,180		$	—		$	129,180
Costs and expenses:
Operating expenses	98,061			13,053			111,114
General and administrative expenses	13,149			453			13,602
Depreciation expense	35,302			2,607			37,909
Total costs and expenses	146,512			16,113			162,625
Operating loss	(17,332		)	(16,113		)	(33,445		)
Other income, net	1,504			—			1,504
Interest and debt expense, net of capitalized interest	(872		)	—			(872		)
Loss before income taxes	(16,700		)	(16,113		)	(32,813		)
Income tax expense	548			—			548
Net loss	(17,248		)	(16,113		)	(33,361		)
Less: Net loss attributable to Predecessor	(76,529		)	(16,113		)	(92,642		)
Net income attributable to partners	$	59,281		$	—		$	59,281



	Year Ended December 31, 2013
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Operating revenues – related party	$	124,985		$	—		$	124,985
Costs and expenses:
Operating expenses	93,025			12,551			105,576
General and administrative expenses	8,004			448			8,452
Depreciation expense	32,493			2,544			35,037
Total costs and expenses	133,522			15,543			149,065
Operating loss	(8,537		)	(15,543		)	(24,080		)
Other income, net	309			—			309
Interest and debt expense, net of capitalized interest	(198		)	—			(198		)
Loss before income taxes	(8,426		)	(15,543		)	(23,969		)
Income tax expense	1,434			—			1,434
Net loss	(9,860		)	(15,543		)	(25,403		)
Less: Net loss attributable to Predecessor	(11,901		)	(15,543		)	(27,444		)
Net income attributable to partners	$	2,041		$	—		$	2,041

The following tables present our previously reported statements of cash flows for the years ended December 31, 2015, 2014, and 2013 (as presented in Exhibit 99.3 to our Current Report on Form 8-K filed with the SEC on August 4, 2016) retrospectively adjusted for the acquisition of the Meraux and Three Rivers Terminal Services Business (in thousands).



	Year Ended December 31, 2015
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Cash flows from operating activities:
Net income (loss)	$	88,721		$	(17,409	)	$	71,312
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense	42,724			2,954			45,678
Deferred income tax benefit	(228		)	—			(228		)
Changes in current assets and current liabilities	(8,973		)	—			(8,973		)
Changes in deferred charges and credits and other operating activities, net	587			—			587
Net cash provided by (used in) operating activities	122,831			(14,455		)	108,376
Cash flows from investing activities:
Capital expenditures	(31,195		)	(6,914		)	(38,109		)
Acquisitions from Valero Energy Corporation	(390,144		)	—			(390,144		)
Proceeds from dispositions of property and equipment	82			—			82
Net cash used in investing activities	(421,257		)	(6,914		)	(428,171		)
Cash flows from financing activities:
Proceeds from debt borrowings	200,000			—			200,000
Proceeds from notes payable to related party	555,000			—			555,000
Repayments of debt and capital lease obligations	(26,200		)	—			(26,200		)
Repayment of note payable to related party	(185,000		)	—			(185,000		)
Payment of debt issuance costs	(2,322		)	—			(2,322		)
Proceeds from issuance of common units, net of discount	189,683			—			189,683
Proceeds from issuance of general partner units	4,011			—			4,011
Payment of offering costs	(666		)	—			(666		)
Excess purchase price paid to Valero Energy Corporation over the carrying value of acquired assets	(576,076		)	—			(576,076		)
Cash distributions to unitholders and distribution equivalent right payments	(71,715		)	—			(71,715		)
Net transfers from Valero Energy Corporation	55,915			21,369			77,284
Net cash provided by financing activities	142,630			21,369			163,999
Net decrease in cash and cash equivalents	(155,796		)	—			(155,796		)
Cash and cash equivalents at beginning of year	236,579			—			236,579
Cash and cash equivalents at end of year	$	80,783		$	—		$	80,783



	Year Ended December 31, 2014
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Cash flows from operating activities:
Net loss	$	(17,248	)	$	(16,113	)	$	(33,361	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense	35,302			2,607			37,909
Deferred income tax expense	43			—			43
Changes in current assets and current liabilities	(1,318		)	—			(1,318		)
Changes in deferred charges and credits and other operating activities, net	(34		)	—			(34		)
Net cash provided by (used in) operating activities	16,745			(13,506		)	3,239
Cash flows from investing activities:
Capital expenditures	(108,331		)	(13,549		)	(121,880		)
Acquisition of the Texas Crude Systems Business from Valero Energy Corporation	(80,116		)	—			(80,116		)
Proceeds from dispositions of property and equipment	54			—			54
Net cash used in investing activities	(188,393		)	(13,549		)	(201,942		)
Cash flows from financing activities:
Repayments of debt and capital lease obligations	(1,048		)	—			(1,048		)
Payment of debt issuance costs	(1,071		)	—			(1,071		)
Payment of offering costs	(3,223		)	—			(3,223		)
Excess purchase price paid to Valero Energy Corporation over the carrying value of the Texas Crude Systems Business	(73,884		)	—			(73,884		)
Cash distributions to unitholders and distribution equivalent right payments	(41,837		)	—			(41,837		)
Net transfers from Valero Energy Corporation	154,172			27,055			181,227
Net cash provided by financing activities	33,109			27,055			60,164
Net decrease in cash and cash equivalents	(138,539		)	—			(138,539		)
Cash and cash equivalents at beginning of year	375,118			—			375,118
Cash and cash equivalents at end of year	$	236,579		$	—		$	236,579



	Year Ended December 31, 2013
	Valero Energy Partners LP (Previously Reported)			Meraux and Three Rivers Terminal Services Business			Valero Energy Partners LP (Currently Reported)
Cash flows from operating activities:
Net loss	$	(9,860	)	$	(15,543	)	$	(25,403	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense	32,493			2,544			35,037
Deferred income tax expense	941			—			941
Changes in current assets and current liabilities	(2,947		)	—			(2,947		)
Changes in deferred charges and credits and other operating activities, net	(421		)	—			(421		)
Net cash provided by (used in) operating activities	20,206			(12,999		)	7,207
Cash flows from investing activities:
Capital expenditures	(124,379		)	(3,022		)	(127,401		)
Proceeds from dispositions of property and equipment	8			—			8
Net cash used in investing activities	(124,371		)	(3,022		)	(127,393		)
Cash flows from financing activities:
Repayments of debt and capital lease obligations	(1,059		)	—			(1,059		)
Payment of debt issuance costs	(572		)	—			(572		)
Prefunding of capital projects by Valero	3,500			—			3,500
Proceeds from issuance of common units, net of discount	372,449			—			372,449
Net transfers from Valero Energy Corporation	104,965			16,021			120,986
Net cash provided by financing activities	479,283			16,021			495,304
Net increase in cash and cash equivalents	375,118			—			375,118
Cash and cash equivalents at beginning of year	—			—			—
Cash and cash equivalents at end of year	$	375,118		$	—		$	375,118